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Thursday, August 15, 2019

Update 8/15 Recession Watch (or Distant Early Warning?)

SPX retested the 8/5 low today and bounced.

SPX came within 3 points of the 8/5 low, but rebounded fairly sharply.  Breadth was slightly positive.  Volume was pretty strong. 

There is a slight positive divergence in the red/green count chart on this retest.

There is a  noticeable divergence in the short term bull pressure lines.

Yesterday and 8/5 saw 90% of the volume in down stocks.  That is a rare thing to happen.  In bull markets those type of days rarely happen this close in proximity.  This could be a sign of trouble for the market longer term.  However, in the short term 90% downside days tend to be exhaustive and lead to bounces.  Since there are some positive divergences on this retest of the low a bounce here would not be surprising.  If that occurs we will have to see how strong the buying is.  Another failure at the 50 DMA could bring on considerably more selling pressure and probably break these lows.  If we continue down, the next support level would be the 200 DMA about 40 points lower.

Interesting article. Recession Watch (or Distant Early Warning?)



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